End of energy support will put trade in 'unsustainable predicament'

By Nikkie Thatcher

- Last updated on GMT

Government announcement: the Spring Budget was unveiled by Chancellor Jeremy Hunt (image: Getty/Mahmud013)
Government announcement: the Spring Budget was unveiled by Chancellor Jeremy Hunt (image: Getty/Mahmud013)

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While the Government has extended its Energy Price Guarantee for households, the Chancellor failed to mention any further support on rocketing utility bills for businesses in the Spring Budget today (Wednesday 15 March).

Addressing the House of Commons, Hunt laid out the statement, which the Government called its ‘Budget for growth’.

A number of voices from the sector have reacted to the announcement and lack of help with energy costs for firms.

The British Beer & Pub Association chief executive Emma McClarkin added: “As 1 April rapidly approaches, businesses are also nervously awaiting what’s next for their energy costs, and a lack of support in today’s announcement will have a direct impact on their ability to keep their lights on and doors open.”

Furthermore, UKHospitality welcomed some of the initiatives revealed today but, outlined how the sector will be affected by ongoing energy hikes.

Chief executive Kate Nicholls said: "Maintaining current levels of energy support to consumers, freezing fuel duty and inflation reducing will help hard-pressed households and increase disposable income, which will be a huge boost for venues in desperate need of trade.

“This will be particularly needed as the sector is still set to see huge energy price increases when current support ends in April, which unfortunately was not addressed. It remains the case that we need to see urgent action on the market failures identified by Ofgem in its non-domestic review update yesterday. The current timeline of further action by the summer is not good enough.

Incredible economic damage

Night-time economy adviser for Greater Manchester Sacha Lord was disappointed by the lack of support for rocketing energy bills.

He said: “In the face of rising bills, business rates and inflation, operators urgently need ongoing support and the Chancellor's announcements, or lack of them, will only further frustrate and anger the industry.

"By its very nature, hospitality is an industry with higher-than-average gas and electricity usage and is a sector that has seen incredible economic damage over the past three years.

'It is therefore disappointing that the Chancellor has not announced a delay to the planned decrease in business energy support or any sector-specific package for the industry.”

He outlined the financial impact of reduction in utility support will have on many in the industry and his predictions for business failures as a result.

"The tapering off of business energy support from the end of March has been forecasted to add £4.5bn to bills compared to the current scheme, and simply put, this will place the industry in an unsustainable predicament and create a sinkhole of financial difficulty for venues across the sector,” Lord added.

"A third of businesses are already cutting trading days as a result of spiralling energy bills and today operators will be even more concerned over how they will continue to pay bills and wages.

"Without energy support, a rise in insolvencies is inevitable as operators conclude the reality of running a business in hospitality is simply no longer financially viable.

"Sadly it is the smaller, independent and often family-run businesses that are taking the brunt of the economic downturn, and that are once again are at the precipice of closure.

Lack of clarity

The night-time adviser urged the Government and Treasury to reconsider its level of support for the UK’s fifth largest industry to avoid these unnecessary closures and job losses.

Lord said: “We are an industry that has historically contributed £66bn per year to the UK economy pre-Covid, and with the right intervention, I have no doubt the sector can thrive once again and aid the economic growth of this country."

Furthermore, the Night-Time Industries Association (NTIA) chief executive officer Michael Kill said the Budget hadn’t gone far enough.

He added: “The lack of clarity on corporation tax thresholds and the extension of the Energy Relief Scheme will be subject to further details being announced by the Government.

“This follows the letter to the Government yesterday from the energy regulator Ofgem​, highlighting the flaws in the scheme and how it impacts businesses, as energy companies profiteer from the most vulnerable sectors, with inflated security deposits, energy rates and uncapped service charges.”

The Campaign for Real Ale also warned venues continued to be at risk of shuttering as a result of the lack of support provided when it come to energy costs for businesses.

Chairman Nik Antona said: "With support for energy bills being extended for households, licensees will be devastated to hear that help for them will end on 1 April. This was a make-or-break Budget for pubs and social clubs, and the future of many businesses is now at risk, with an imminent cliff edge in support and rocketing energy costs on top of the other pressures facing the licensed trade. Communities will lose their local pubs because energy support is ending."

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